Zoltan Nagy Pleads Guilty in Atlanta Federal Court to U.S. Securities Fraud Schemes
A 60-year-old Vancouver businessman, Zoltan Nagy, pleaded guilty on Oct. 20 in federal court in Atlanta to conspiring to commit securities fraud, CTV News reported. Prosecutors stated that stock-manipulation schemes involving penny stocks cost investors more than US$1 million.
The case centres on two distinct pump-and-dump operations targeting publicly traded penny stocks. Federal prosecutors alleged that the conspirators compromised U.S. online brokerage accounts to force share purchases in controlled companies, enabling associates to liquidate their holdings at artificially inflated prices.
The Lotus Bio-Technology Market Manipulation Scheme
Investigators identified Nagy as the sole officer and director of Lotus Bio-Technology Development Corp., which traded under the ticker LBTD. By early August 2017, prosecutors said Nagy and co-conspirators Richard Tang, Davies Wong, and Phillip Sewell controlled the majority of shares available for public trading.
Later that month, Rahim Mohamed and another co-conspirator allegedly hacked into a U.S. brokerage account to force the purchase of 200,000 Lotus shares. Simultaneously, Wong and other associates sold 261,000 shares, primarily absorbed by the compromised account at inflated prices.
The operation scaled significantly the following month. On Sept. 19, 2017, Mohamed or an operative directed by him allegedly breached 24 customer accounts across multiple U.S. online brokerage firms, forcing them to acquire millions of Lotus shares.
While the compromised portfolios absorbed the buy volume, Wong and his co-conspirators offloaded approximately 7.75 million shares. This generated nearly US$1.1 million in proceeds, which investigators say were subsequently distributed among Nagy, Wong, Tang, Sewell, Mohamed, and other participants.
These defendants engaged in sophisticated stock price manipulation that harmed investors and undermined confidence in the market,
U.S. Attorney Theodore S. Hertzberg stated.
The Good Gaming Inc. Share Transfer and Account Compromise
A second scheme targeted Good Gaming Inc., a publicly traded penny-stock company operating under the ticker GMER. Glenn Laken, a 72-year-old resident of Chicago, served as the chief executive officer, chairman, and controlling shareholder of a separate entity that owned 61 percent of Good Gaming by late 2017.
In early January 2018, Tang coordinated with Laken to transfer approximately 2.9 million Good Gaming shares into accounts held by co-conspirators. Mohamed or an individual acting at his direction then allegedly breached several U.S. brokerage accounts, forcing purchases of over one million Good Gaming shares.
Concurrently, other participants sold more than 700,000 shares acquired from Laken, netting nearly US$170,000. Prosecutors stated that these proceeds were split among Laken, Tang, Mohamed, and others.
Laken previously sustained a 2002 conviction for racketeering conspiracy, wire fraud, and related offenses concerning pension fund fraud and stock manipulation. Laken pleaded guilty to conspiracy to commit securities fraud last month.
Sentencing Schedules and Outstanding Defendants
Nagy now faces a maximum penalty of five years in prison, with his sentencing scheduled for Jan. 20, 2027. Laken is scheduled to be sentenced a week earlier on Jan. 13, 2027.
Three other Vancouver residents implicated in the Lotus Bio-Technology scheme have also entered guilty pleas. Richard Tang faces up to 20 years in prison, while Phillip Sewell and Davies Wong each face up to five years. All three men are scheduled for sentencing in January.
In addition to potential prison terms, the U.S. attorney’s office indicated that the defendants may face restitution orders and fines reaching up to US$250,000 or twice the gross gain or loss, whichever value is greater.
Meanwhile, Rahim Mohamed, a 50-year-old resident of Calgary identified by investigators as a central figure in the brokerage account breaches, remains at large as law enforcement agencies actively seek information regarding his whereabouts.
